MOSCOW (MRC) -- Crude oil futures were steady to marginally lower in mid-morning trade in Asia June 23 following an overnight rally, as demand uncertainty continues amid concerns of a second wave of COVID-19 infections, reported S&P Global.
At 10:35 am Singapore time (0235 GMT), ICE Brent August crude futures slipped 1 cent/b (0.02%) from the June 22 settle at USD43.07/b, while the new front-month NYMEX August light sweet crude contract was 4 cents/b (0.1%) lower at USD40.69/b.
Prices settled higher June 22 owing to a tighter global supply outlook, but came off this morning as uncertainty continued to cap gains.
"In an environment where the WHO (World Health Organization) had only recently announced on Sunday a record increase in global COVID-19 cases, sentiment can certainly still turn very promptly with the flick of the switch," IG's market strategist Pan Jingyi said in a June 23 note, referring to markets in Asia.
Trading sentiment remains cautious as investors continue to weigh mixed drivers in the recent oil market.
"Still, the markets will remain nervous and sensitive to bad news... sentiment could quickly reverse on a dime after the extended rally in oil," Axicorp chief global markets strategist Stephen Innes said in a June 23 note.
Innes added that the outlook depends on whether evidence of shut-in global non-OPEC production returns, as a result of higher oil prices.
Recent efforts by OPEC+ to step up compliance have helped to support prices for now.
Meanwhile, signs of slowing US drilling helped provide a floor to prices, with US oil rigs trending lower in recent weeks.
The US' commercial crude stocks are also expected to have declined 100,000 barrels to around 539.3 million barrels during the week ended June 19, analysts surveyed by Platts said. The market looks towards inventory data to be released June 24 by US EIA for a clearer direction.
As MRC informed before, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.
Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.
We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC